indian energy exchange - now & beyond date: april 2017 · 2019-08-29 · two pronged business...
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a I EX INDIAN ENERGY EXCHANGE
Dated: August 28, 2019
The Manager BSE Limited Corporate Relationship Department Phiroze Jeejeebhoy Towers Dalai Street Mumbai- 400001
The Manager National Stock Exchange of India Ltd Listing Department Exchange Plaza, 5th Floor, Plot no C/1 G Block, Bandra Kuria Complex Bandra (E), Mumbai-400 051
Scrip Code: BSE- 540750; NSE- IEX
Subject: Investors Presentation Q1 FY 2020
Dear Sir / Madam,
Pursuant to Regulation 30 of the SEBI (LODR) Regulations, 2015, please find attached Investor Presentation Q1 FY 2020.
This is for your information and records.
Thanking You
Yours faithfully,
For Indian Energy Exchange Limited
Vineet Harlalka Company Secretary & Compliance Officer
Encl: as above
www.iexindia.com
Indian Energy Exchange Limited Registered & Corporate Office: Unit No. 3, 4, 5 & 6, Plot No.7, Fourth Floor, TDI Centre, District Centre, Jasola, New Delhi — 110025
Tel: +91-11-4300 4000 I Fax: +91-11-4300 4015
CIN:L74999DL2007PLC277039
For Public Use
Investor PresentationQ1 FY 2020
Contents
2
1 India’s economic roadmap
Electricity will drive Indian economic growth
Power shift
Power markets – imperative to realize GOI vision
• Current power market structure
• About IEX
• Way forward
• Financial Performance
Summary
2
3
4
5
Economic Roadmap
Robust economic fundamentals
4
• India’s GDP is projected at 6.9% for FY’20
• Government envisions India as a $5tn economy by FY’25
• India to surpass Japan to become the third largest economy by 2025
• Education, Healthcare, Agriculture to the key growth pillars
• 17 of 20 world’s fastest growing cities in India
Electricity will drive Indian economic growth
Electricity as a key input to economic growth
6
• India is:
• 3rd largest consumer of electricity• 3rd largest producer of electricity; and • 5th largest in the world in RE capacity1
• Make in India targets manufacturing to contribute 25% to GDP
• Industries consume 42% of total electricity
• Agriculture and domestic consume 18% and 24% respectively2
Contribution to GDP %2 FY’19 (%)
Agriculture, forestry & fishing 16.1
Mining & quarrying 2.4
Manufacturing 16.4
Construction 8.0
Services 57.1
1. MoP – 5 year vision document for power sector; 2. MOSPI; CEIC; 3. Company reports; CMIE; defined as per GICS classification
Sectors Power and fuel costs as a % revenues3
Utilities 44%
Communication Services 38%
Materials 17%
Industrials 14%
Consumer Discretionary 11%
Power sector shift
Electricity value chain
Distribution is licensed
Financial losses of state DISCOMs at 1.6bn pounds (FY’18)
Persistent AT&C Losses
Distribution and supply business is combined
Generation De-licensed
Private sector accounts for 46% of the installed capacity
Transmission is licensed
Single largest integrated network in the world
Pvt sector account for 8% of network
Energy deficit decreased from 10% to 0.7% over the last decade
Source: MoP – 5 year vision document for power sector
Government envisions power for all
9
Availability Accessibility Affordability
Shift towards renewable energy
10
Changing Installed Capacity Mix – Increasing reliance on RE
Paris Climate Agreement – Renewable energy to constitute 40% of total installed capacity base of 1250 GW
Source: CEA
Thermal63%
Nuclear2%
Hydro13%
Small Hydro
1%
Wind Power10%
Bio-Power3%
Solar8%
Thermal53%
Nuclear2%
Hydro10%
Small Hydro1%
Wind Power12%
Bio-Power
2%
Solar20%
Thermal35%
Nuclear2%
Hydro8%
Small Hydro1%
Wind Power17%
Bio-Power1%
Solar36%
2019 2022 2030
Megatrends – 4D
11
• The rapid deployment of low-carbon technologies such as wind and solar.
• Outlook:
• Renewables will become leading energy sources
• New technologies like hybrid would emerge in future depending on local characteristics and specific financial incentives.
Decarbonization
• The addition of intelligent control systems and internet-enabled software to optimize plants and the grid.
• Outlook:
• Aggregation (DR,VPP) would emerge with the adoption of new digital technologies.
Decentralization
• The distribution of small-scale generation throughout the T&D network.
• Outlook:
• RE in general will pose a threat to centralized energy production paradigm.
• Need for local solutions will increase
Digitization Democratization
• The empowerment of consumers by putting of economic power in the hands of individuals and taking some political power away from large corporations.
• Outlook:
• Energy trading between consumers
Source: Press
Power markets – imperative to realize GOI vision
SECTOR OVERVIEW &
IMPACT ON POWER EXCHANGE
Power market structure
Long Term Short Term
Long-term Power Purchase Agreements
(PPA)
Bilateral & Banking Transactions
Deviation settlement/Unscheduled Interchange
88.3% 5.4% 4.2% 2.0%
Exchanges (Only up to 11 days)➢ Day Ahead Contingency➢ Daily➢Weekly ➢ Day Ahead Market
Up to 25 yearsOTC:
Intraday to 1 yearExchanges:
Intraday – 11 daysReal Time
1,245,317 MUs
11,001,119 67,813 MU 52,252 MU 25,132 MU
Source: CEA; CERC
Power markets imperative to deliver vision
14
Power on Demand
Competitive pricing
Flexibility
Predictability
Key market drivers
Growing demand for electricity
• Vision to provide electricity to all (Availability,
Accessibility, Affordability)
• Power on 24x7 basis
• Economy growth - $ 2.7tn to $ 5tn by FY 2025
• Rapid Urbanization and
• Smart Cities
• Electric Mobility
• Sustainability - Paris Climate Agreement
Enabling Policy and Regulatory framework
• MoP 5 year vision document emphasizes on deepening the power market
• Emerging framework
• Real Time Electricity Market and National Open Access Registry
• Domestic Coal Allocation
• Phasing out of Old plants
• Cross Border Trade
• Long Duration Contracts
• Green Market
• Uday 2.0 - DISCOM financial repair
• Barriers to open access to be addressed through tariff policy amendments
Markets have immense potential
12,994
6,940 7,035 6,603
3,127 3,927
2,601
1,149
US France Germany Russia GlobalAverage
China Brazil India
Per Capital Electricity Consumption (KWh)2
11,42,928
12,13,326
12,74,595
FY17 FY18 FY19
Total Electricity Demand (MU)1
• India’s per capita electricity demand is 1/3rd global average
• ~ 45 GW of PPA’s retiring in the next 8 years
• ~4.3 GW of PPA’s (LT and MT) expiring in the next 8 years
Source: 1. CERC; 2. World Bank; 3. CEA
1,4001,483
1,5661,651
1,7401,836
1,9392,047
2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 2025-26 2026-27
Expected Electrical Energy Requirement (BU)3
Global benchmarking
9.3%
10.3% 10.4% 10.5%11.4%
2.7%3.1%
3.6% 3.9% 4.1%
FY15 FY16 FY17 FY18 FY19
Share of ST Market in total demand Share of exchanges in total demand
91%
49% 47%39%
34%
23%15%
Exchange market as a % of total demand – Global2Exchange market and ST market a % of total demand – India1
Power markets in developed economies are in the range of 30-80% of total power demand vis a vis 4% in India
Source: 1. CERC; 2. CRISIL Study
IEX has seeded & developed a robust power market
2003• Market framework for
Exchange operations put in place
2008 • IEX commenced operations
2009• Introduced Term-Ahead
Contracts
2011
2017
• Introduced Renewable Energy Certificates
• Introduced Energy Saving Certificates
• Technology Buy out
• Initial Public Offering
Source: Company
We are a leading power exchange in India
• High Participation: 6500+
• 4000+ Industries • 56 Discoms (all)• 500+ Generators • 1600+ RE Generators & Obligated
entities • 100+ ESCert Entities
• Average daily trade: 142.8 MU (Q1FY20)
• Exchange Market Share: >97%
• Highly scalable business model and proven technology
• Qualified and experienced team
Electricity Cleared Volume (BU)
FY15 FY16 FY17 FY18 FY19 Q1 FY20
28.3
34.3
40.5
46.2
52.2
13.0
Source: Company
Market Segments
Day-Ahead Market
• Delivery for next day• Price discovery: Closed , Double-sided Auction
Term-Ahead Market
• Intraday: For Delivery within the same day• Day Ahead Contingency: Another window for next day• Daily and weekly contracts
Renewable Energy Certificates
• Green Attributes as Certificates• Sellers : RE generators not under feed in tariffs• Buyers: Obligated entities; 1MWh equivalent to 1 REC
Energy Saving Certificates
• 1 ESCert = 1 mtoe (metric Tonne of Oil Equivalent)• Trading Session on every Tuesday of the Week• Trading time 1300 hrs to 1500 hrs
Auction Continuous
Source: Company
We deliver the national vision
• Working in line with government’s vision to deliver:
• Power for all • On 24*7 basis• Reducing cost of doing
business• Increasing ease of doing
business
• High liquidity on exchange
• Most competitive price discovery
• Flexibility to market participants, any quantum anytime
1 5 9 131721252933374145495357616569737781858993
Telangana Buy Sell Volume on 15th May, 2019
Sell Schedule Buy Schedule
3.58 3.73 3.46 2.49
4.03
4.74
4.344.30 3.54
4.32
-3
3
8
-
1
1
2
FY 11 FY13 FY15 FY 17 FY 19
IEX vs Bilateral Price1
IEX Wt. Avg Price Bilateral Price
Source: 1. CERC MMC
High charges deterring open access
DNH OD PD WB AP DD CHD HPMAH
JK MP UK PB DL GUJ CH RAJ BH KERAP(EP
DCL)TL MG KN TN AS HR UP JH
OA Charges (Rs/kWh) 2.51 3.04 4.03 5.28 1.94 2.01 3.36 2.50 5.26 0.69 3.21 1.74 3.39 4.49 3.12 2.70 3.61 3.39 1.99 2.55 2.83 3.08 3.56 2.64 3.26 2.86 2.26 2.09
DISCOM Charge (Rs/kWh) 3.65 4.25 5.35 6.67 3.50 3.60 5.00 4.20 7.07 2.60 5.50 4.20 5.98 7.25 6.25 5.85 6.80 6.60 5.20 5.87 6.15 6.50 7.00 6.35 7.20 6.92 6.35 6.25
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
OA Charges (Rs):<Rs 2 in 4 StatesRs 2-3 in 10 StatesRs 3-4 in 10 States>Rs 4 in 4 States
Source: Tariff Policies; Company
These charges are added on price discovered at IEX (Rs 3.3 in Q1’20) making open access uncompetitive.
Two pronged business strategy
Deepen Power Market
Maximize DISCOM and Open Access volume
Introduce long duration contracts from 1 day to 365 days
Cross Border Trade - Nepal, Bhutan, Bangladesh and Myanmar
Real time markets and National Open Access Registry – 48 half hourly auctions over the day to enable delivery within one-hour after close of trading window
New bid order types for Day Ahead Market
G-TAM – exclusive market for trading green power and RPO
Ancillary Market
Source: Company
To leverage technology & enable next level of optimization and efficiency
NewOpportunities – tech based
Smart Power Procurement
Analytics
New product development
Demand forecasting
Use of block chain and AI
Source: Company
Robust financial performance
74.2 67.8 69.761.7 56.2 58.541.9 37.9 39.6
83%83%
84%
80%
81%
82%
83%
84%
85%
Q1 FY 2019 Q4 FY 2019 Q1 FY 2020
Revenues EBITDA PAT EBITDA Margin
Breakup of revenues Q1 FY 2019 Q4 FY 2019 Q1 FY 2020
Transaction Fees 83% 77% 81%
Admission and Annual Fees
7% 6% 6%
Other Income 10% 17% 13%
Focus on operational excellence and cost management
Rs. Cr
Source: Company
Summary
• India to continue being the fastest growing economy
• Electricity is a critical input into economic growth
• We are on the cusp of shift in the energy mix
• Power markets are at nascent stage; potential for growth is immense
• Growing demand for power & conducive policy/regulatory framework to accelerate power market growth
• IEX is uniquely positioned to deliver the government’s vision
Summary
Thank You
ANNEXURES
MoP 5-year vision document
• Improve transmission capacity utilization by introducing physical capacity trading and financial transmission trading
• Improve distribution sector through developing mechanism for unbundling distribution companies into wires and supply business & implementation of analytical tools for power purchase & cost optimization.
• Improve liquidity in short term by enabling increased participation of Discoms and Gencos.
• Stronger regulations and stringent penalties for discouraging use of DSM to meet energy requirement
• Review of gate closure norms and ‘Right to Recall’
• Allowing state and central Gencos to sell surplus power
• Introduce financial products such as derivatives, contracts for differences and Real Time Market.
• Move from regulated to market based mechanism for Ancillary Services
• Introduce products in Balancing market for trading of balancing services from fast response plants such as Hydro
• Enhance cross border trade through market products
Installed Generation Capacity of India (GW)
165185 192 197 201
24
26 26 26 26
6
6 7 7 741
4344 45 4532
3957
6978
268
298
327344
356
FY 15 FY 16 FY 17 FY 18 FY 19
Coal Gas & Diesel Nuclear Hydro RES
Total Generation in India (GW) FY 2019
Category Installed
Capacity (MW)PLF(%)
Generation (BUs)
Feasible PLF(%)
Possible Generation(BUs)
Coal 200,705 61 1,022.3 80 1407Gas 24,937 23 49.8 25 55
Diesel 638 2 0.1 0 0Hydro 45,399 34 134.9 40 159
Nuclear 6,780 64 37.8 80 48RE 77,642 19 126.0 20 136
Total 356,100 1371 1,804
28.12 33.96 39.78 44.84 50.06
11.99
0.220.33
0.741.37
2.10
1.01
FY15 FY16 FY17 FY18 FY19 Q1 FY20
TAM
DAM
28.3 34.3 40.5 46.2 52.2 13.0
12 14
22
29 28 34
4045
50
28
3636
35 3535 34
41
51
3.58 3.47 3.73 2.89 3.46
2.71 2.49 3.41
4.03
4.74
4.23 4.34 4.27 4.30 4.13 3.54 3.61
4.32
-1
2
4
6
8
-
10
20
30
40
50
60
FY 11 FY12 FY13 FY14 FY15 FY16 FY 17 FY 18 FY 19IEX Volume Trader Volume IEX Wt. Avg Price Bilateral Price
IEX v/s Bilateral Volumes (BU) and Prices
IEX Cleared Volumes (BU)
IEX v/s Bilateral comparison
Industrial consumers on IEX
Haryana, 476
Punjab, 428
Rajasthan, 332
Uttarakhand, 135
Gujarat, 540Andhra
Pradesh, 497
Telangana, 224
Karnataka, 256
Tamil Nadu, 885
Others, 298
287
173
114 10774
237
Textile Metal Chemical Automobiles Cement Others
1. Active consumers
Registered open Access Consumers - By States (As on 30th June,19)
Open Access consumers spread across industries1 (As on 30th June,19)
Cost optimization - Punjab DISCOM
Sold 1430 Mus during Sep/Oct’ 18 @ Rs.5.74/u. Additional revenue of Rs.350 Cr.
Sell
Purchased 385 Mus from exchange at average rate of Rs.3.09 per unit resulting into savings of Rs.19 Cr.
Buy
Back down/reduced the power drawn from private thermal plants and replaced it with a very low cost power available at exchange during night in the month of Nov/Dec 2018.
Replace
• PSPCL case of optimization used to mobilize states currently not doing optimization through market
35
DEEP v/s IEX
Case: Maharashtra
36
✓ Telangana discoms Tender for 1000 MW RTC power for period 1st Jul, 2019 to 31st Mar,2020.
✓ The prices discovered at DEEP- portal are ranging from Rs. 5.48 - Rs. 5.80 per unit, muchhigher in comparison to IEX prices.
*Above price comparison is at Telangana state periphery
PeriodEnergy as
per Tender (MUs)
L1 Price discovered
in DEEP Portal
Power Purchase
cost (Rs.Cr)
IEX Avg Price FY 2018-19
(Delivered)
10% increase in IEX Prices(Delivered)
Cost if purchased
at IEX(Rs Cr)
(without escalation)
Cost if purchased
at IEX(Rs Cr) (with
escalation)
Savings – IEX price as last year
(Rs.Cr)
Savings - IEX last year price with 10% escalation
(Rs.Cr)
Jul-19 744 5.48 408 3.72 4.09 277 304 131 103Aug-19 744 5.48 408 3.62 3.98 269 296 138 111Sep-19 720 5.48 395 4.97 5.47 358 394 37 1Oct-19 744 5.48 408 7.06 7.77 525 578 -118 -170
Nov-19 720 5.48 395 3.90 4.29 281 309 114 86Dec-19 744 5.48 408 3.60 3.96 268 295 140 113
Jan-20 744 5.48 408 3.61 3.97 269 295 139 112Feb-20 696 5.48 381 3.49 3.84 243 267 139 114Mar-20 744 5.48 408 3.77 4.15 280 309 127 99
Total 6600 5.48 3617 4.19 4.61 2770 3047 847 570
DEEP v/s IEX
37